Norsk Hydro reported numbers for the second quarter on Tuesday. The firm’s numbers suffered thanks to outages at key plants and increased cost of raw materials, but losses were mitigated somewhat by a rise in metal prices and gains in downstream and energy businesses.
In the second quarter this year, Hydro mined 1,348 thousand metric tons of bauxite ore, a 54-percent drop over last year’s second-quarter total of 2,943 thousand metric tons, and a 42-percent drop over the first quarter’s total of 2,326 thousand metric tons.
Hydro refined 829 thousand metric tons of alumina in the quarter, 47 percent less than last year’s second-quarter refining total of 1,576 thousand metric tons, and 35 percent below the first-quarter total of 1,277 thousand metric tons.
The second quarter saw Hydro smelt 492 thousand metric tons of primary aluminium in the quarter, which was down 6 percent year-on-year from 523 thousand metric tons, and down 4 percent quarter-on-quarter from the first quarter total of 514 thousand metric tons.
President and CEO Svein Richard Brandtzæg noted that production difficulties in the quarter could be laid at the feet of the Alunorte, Paragominas, and Albras plants which are currently running at only half capacity.
“We are continuing our dialogue with Brazilian authorities, aiming to resume normal operation at Alunorte as soon as possible. The process to resolve the situation in Brazil is challenging and has taken longer than expected. We have implemented measures that enable Alunorte to operate safely also going forward, but the timing for resuming full production remains uncertain.”
The firm showed revenue of NOK41,254 million in the quarter, better year-on-year by 68 percent from last year’s revenue of NOK24,591 million, and 3 percent above the first quarter’s revenue of NOK39,971.
Earnings before financial items and tax (EBIT) in the quarter came to NOK2,986 million, up by 1 percent from last year’s EBIT of NOK2,946 million, and off by 10 percent over the first quarter’s EBIT of NOK3,301 million.
Underlying EBIT in Q2 figured at NOK2,713 million, down by 7 percent year on year from last year’s total of NOK2,930 million, and off by 14 percent quarter-on-quarter from last quarter’s number of NOK3,147 million.
EBITDA in the quarter totaled NOK4,860 million, up 12 percent year-on-year from last year’s total of NOK4,335 million, but off by 6 percent from last quarter’s total of NOK5,193 million.
Net income in the quarter came to NOK2,703 million, better by 33 percent from last year’s second quarter net income of NOK1,562 million, but essentially level with last quarter’s net income of NOK2,076 million.
Going forward, Brandtzæg indicated that a deficit is likely to increase in the aluminium market, in no small part due to the Trump administration’s actions earlier this year.
“We see the global primary aluminium market in a stronger deficit in 2018, based on lower-than-expected production growth, and maintain a global primary aluminium demand growth of 4-5 percent in 2018. The market uncertainty continue on US tariffs, US sanctions on Rusal and the Brazil situation,” he opined.